This is a segment from the Empire newsletter. To read full editions, subscribe . Unlike memecoins — which Blockworks Research thinks are here to stay — an altcoin szn may not come back…at least not in the way we’re used to. The 2020/2021 cycle may have been the peak, K33’s David Zimmerman wrote in a note. “Without fresh retail inflows, the math gets tougher for speculative tokens with no revenue, no product, and no roadmap beyond vibes,” he said. One of the big changes, outside of the overall maturity cycle we see, is that memecoins have really solidified themselves within crypto. To put it another way: Why play a narrative-driven token when you can make a memecoin play instead? As I wrote in the Milk Road last week, memecoins represented roughly 25% of the overall volumes in crypto at the peak of Q1. This means the path forward for altcoins is more likely to be selective. As Zimmerman noted, the overall “altcoin market faces $4.3 billion in token unlocks in May, $2.8 billion in June, and $3.2 billion in July. These unlocks are headwinds that demand a surge in new liquidity to be absorbed.” “In the absence of any significant surge of demand or new retail inflows, the math is simple: more supply facing static or shrinking demand equals downward pressure.” Outside of the obvious need for liquidity, times have simply changed. Back in the day, altcoins could get a boost just by being in proximity to a hot narrative. Now, there’s more of a need for fundamentals (I swear I’m not trying to keep bringing this up , it’s just what’s happening). Zimmerman said that bitcoin will remain dominant, but there will be chances to allocate smaller positions to altcoins. While some may outperform, the “windows are limited and increasingly fleeting.” Tokens may not continue to be the big winners as crypto matures. Take, for example, stablecoins. “The most bullish crypto asset outside of Bitcoin right now is almost certainly stablecoins. They are making their way into payment infrastructure, relentlessly growing in market cap, and positioning themselves at the center of both retail and institutional use cases,” Zimmerman said. In a sea of choices, now investors will have to pay attention to metrics before aping into a token (unless you stick with memecoins). For K33, this means understanding the product-market fit, user growth, or revenue of said token. RIP, face-ripping altcoin rallies. You were fun. But hello to a more — dare I say — serious era of crypto. Get the news in your inbox. Explore Blockworks newsletters: Blockworks Daily : Unpacking crypto and the markets. Empire : Crypto news and analysis to start your day. Forward Guidance : The intersection of crypto, macro and policy. 0xResearch : Alpha directly in your inbox. Lightspeed : All things Solana. The Drop : Apps, games, memes and more. Supply Shock : Bitcoin, bitcoin, bitcoin.
